Life sciences companies are beginning to reassess their strategies with many looking beyond the well-travelled broad indication drugs and seeing personalised medicine as the future

More than two-thirds of life sciences companies (70%) now cite businesses that have a focus on personalised medicine as an area where they will increasingly look to make acquisitions. Indeed, this was the second most popular area in the survey – a strong indication that personalised medicine has a significant part to play in life sciences companies’ future strategies.

In an era where medical practitioners are increasingly focusing on the idea of “the right drug for the right patient at the right time”, the potential prize for the producers of those drugs is a valuable one. The “one-size-fits-all” approach to drug prescription feels increasingly out-of-date now that it is often possible to identify the right therapy for a patient depending on their genetic make-up and other predictive factors. “We are moving to a world where the emphasis is on gathering evidence to identify interventions that are most effective at improving health outcomes and technology is making this possible,” says the CEO of one large US pharma company.

For the time being, broad indication drugs remain the mainstay of the portfolios of the majority of pharmaceutical companies. “The generics sector will continue to consolidate,” says Reed Smith’s Brian Miner. “We are now seeing some very large companies with extensive portfolios of these products.” The CEO of one US company says: “The predictable regulatory path makes development of broad indication drugs more reliable and effective and gives us a clear path to follow.”

However, in a highly competitive marketplace, where the struggle for differentiation has never been tougher, this will change, particularly given developments such as sophisticated new data analytics tools. Reed Smith corporate partner Diane Frenier in Princeton is convinced of the attractions of personalised medicine to many companies in the sector. “Targeted therapies enable them to differentiate their products with the payers and they’re likely to get better coverage as a result,” she says. “They’re also improving patient compliance – one of the biggest challenges with therapies is that patients don’t take the medication, often because they’re not seeing the benefits, but with targeted therapies, patients are more likely to see a benefit and to comply.”

Despite a continued and current focus on broad indication medicine, personalised medicine offers the promise of higher returns despite smaller potential patient populations given the more targeted nature of drugs.  And there are a number of indicators which point to an even brighter future.

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Reed Smith on personalised medicine

The future of medicine is to have the right medicine for the right patient and the right dose at the right time; there are already over 100 different drugs that are recognised by the FDA as having some type of personalised labelling in their usage.

Carol Loepere, Reed Smith partner in Washington D.C. and chair of the Life Sciences Health Industry Group

Tech in the driving seat

As the chart below reveals, the vast majority of pharmaceutical companies believe technological advances will drive the move towards personalised medicine. More than half (52%) believe this move will be significant. “Personalised medicine enables businesses in our sector to make changes and to create an impact taking into consideration the choices a patient has made,” says the CEO of an APAC-based specialist in infectious diseases. “The efficiency rate is high which makes it a good catch for many in our industry.”

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A broad range of technological drivers are enabling pharmaceutical companies to move towards personalised medicine (see chart below). The director of M&A at one European life sciences company says: “Identifying effective biological compounds through the use of new technologies is likely to impact the odds of clinical success and this is possible through quality data.”

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More sophisticated big data tools enable much more advanced analysis of patient information, while new delivery systems ranging from 3D printing to online pharmacies facilitate a much more bespoke approach to treatment. In China, for example, e-commerce firm Alibaba now runs a major online pharmacy operation, which is poised to benefit as regulation is eased to allow such operations to sell prescription drugs.

So too do advances in studies of the genetic differences that cause patients to respond differently to the same drugs. Almost as important is the attitude of regulators, with medical authorities increasingly keen to encourage advances in this area.

Enabling a strategic approach in terms of geography also promises further efficiency. The director of strategy at an APAC-based business adds: “Greater use of data and analytics in clinical trials would help in determining the healthcare region on which to focus – this is the crucial element of the initial stage of creating personalised medicine.”

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Reed Smith on R&D talent

While there isn’t a shortage of R&D talent, there may well be a shortage of talent that can really focus their efforts on potential business as well as scientific research. And that’s the challenge for the scientific community – finding someone who not only has the scientific talent but can also see the business case for what they’re working on.

Diane Frenier, Reed Smith corporate partner, Princeton

Why personalise?

The promise of personalised medicine is a happy combination of improved outcomes for many patients and an enhanced commercial performance. Most obviously, more than a quarter (26%) of life sciences companies see an opportunity to charge higher prices for more targeted drugs (see chart below). Almost as many (25%) point to the higher efficacy rate per patient of these treatments. That should encourage drug buyers to pay the higher prices quoted, since with fewer non-respondents to a treatment, its cost-benefit case improves – this is a consideration for 24% of life sciences companies.

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“Businesses that have the capabilities to create personalised medicine will be rewarded with higher drug prices as they will provide a higher degree of security on treatment results,” argues the director of strategy at a European life sciences company. “This will create a difference in market position and get the business positive attention in the markets.”

It is relatively early days in personalised medicine, but advances are being made quickly. The UK research firm Diaceutics says 19% of therapies on the market today are targeted in some way, up from 6% in 2010, with the sector led by Roche, Johnson & Johnson and Novartis.

This differentiation point is crucial, says the CEO of another European pharmaceuticals company: “The main advantage of personalised medicine would be efficacy rates that help businesses distinguish themselves from competitors.”

Patient-focused personalised medicine

Investors looking to explore personalised medicine may find that one of the key advantages of these particular drugs – because they are specific to a patient or patient population – is that they get investors closer to the patient.

Carol Loepere, Reed Smith partner in Washington D.C. and chair of Reed Smith’s Life Sciences Health Industry Group, says: “For many of these drug usages, this could be a lifetime or a long-time usage, and so you have that additional connectivity with
your patients.”

Jumping the hurdles

Regulation is by far the biggest challenge inhibiting further advances in the development of personalised medicines. More than a third (34%) of life sciences companies complain that a lack of regulatory guidance on how they should proceed is causing them difficulties, almost twice as many as those who worry about the next most significant hurdle (see chart below).

“Some of the challenges are around reimbursement and payment because if you have a drug and then an accompanying laboratory test to see whether the patient would benefit from it, whether the insurance company or the payer will pay for both the product and the test is an area of regulatory uncertainty,” says Reed Smith’s Carol Loepere. “There are also issues about post-market surveillance because if you start with a relatively small patient population, it’s more likely that other symptoms or negative outcomes will come to light later on.”

While there has undoubtedly been some progress in certain countries, the regulatory regimes that govern drug development have so far failed to keep pace with the development of personalised medicine. The US is doing best – the number of FDA-approved drugs linked with a particular biomarker has leapt over the past three years, to more than 80 from just over 20 – but in other markets, progress has been slower.

“The lack of regulatory guidance is making it difficult,” complains the CEO of a US specialist in neurology, though the executive also believes this is likely to prove a temporary roadblock. “With appropriate support, new products will reach the market for sure – many governments are now working on this and once they resolve these issues what currently looks like a great challenge will turn out to be a big opportunity.”

Reed Smith’s Diane Frenier says life sciences companies are beginning to work to help the regulatory authorities to move more quickly. “Companies understand that they have to find new ways to present data showing the efficacy of therapies,” she says. “They will have to make this even more of a priority.” One possibility, for example, is to work on a cross-industry basis. In Europe, for example, the European Alliance for Personalised Medicine is doing exactly that.

All on broad

Despite the optimism shown for personalised medicine, the sector is unlikely to turn its back on broad indication drugs for the foreseeable future, as they continue to present significant commercial opportunities. The huge commercial market for these drugs is one attraction – almost half (45%) of life sciences companies see this as a benefit of developing further treatments (see chart below).

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Moreover, the regulatory process during the development of broad indication drugs is smoother – almost a third of companies (30%) cite this as a benefit. The CEO of a US life sciences company in the haematology sector puts it this way: “The predictable regulatory path makes development of broad indication drugs more reliable and effective – we have a clear path to follow in order to match global health standards.”

Personalised regulations

Regulation of personalised medicine is evolving, but frustrations remain for many pharmaceuticals companies active in this area. As they work to build the data cases necessary to convince regulators of the efficacy of new targeted therapies, approvals may take longer to gain than hoped for.

Reed Smith’s Diane Frenier says the key is for the industry to work with regulators and other stakeholders. “The regulatory approval process will continue to evolve and life sciences companies need to find more ways to work closely with the agencies,” she says. “They need to educate them on what technology is coming through and to help them think about how to analyse these technologies during the approvals process.”

It may also be necessary to work with broader groups. In Europe, for example, personalised medicine advocates have begun preparing briefing documents for MEPs and other politicians, as they seek to educate a broader audience.

Broad-based issues encourage personalised medicine

Nevertheless, the life sciences sector’s frustrations with broad indication drugs are likely to encourage more companies to pursue opportunities in personalised medicine. As the chart below reveals, almost a third of life sciences companies (29%) are now concerned that the market for these products has become so saturated that it is very difficult to find any points of commercial differentiation. More than a fifth (22%) are worried about the lack of efficacy of broad indication drugs – drugs with high rates of non-responders will suffer diminishing returns. The same number point to the difficulty of conducting the large-scale clinical trials that broad indication drugs require.

These problems seriously worry many life sciences company executives. “Broad indication drugs can have a different impact on different patients which can make it difficult for businesses to achieve the expected output – commercial success is not a guarantee,” cautions the director of strategy at a European pharmaceutical company.

“The scope of differentiation is as good as zero as most businesses will take a step back in making further investments in R&D activities,” adds the chief strategy officer at another European business. “Broad indication drugs serve a common purpose and at times can fail to enhance patient health – this exposes them to the risk of low productivity, uncertain revenue and unpredictable demand; development is therefore challenging.”

The traditional response to these issues has been to stress the importance of diversity – if one product disappoints or suffers unexpected setbacks, there are other drugs within the portfolio for the company to fall back on. However, diversification has its own difficulties – large numbers of life sciences businesses point to a number of problems with this strategy, as the chart below shows.

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Most significantly, it is expensive and practically challenging to recruit and retain teams of people with sufficiently high-level scientific and R&D expertise to lead credible development in a number of different areas simultaneously. More than two-thirds (69%) of life sciences businesses see this as a problem, while almost as many (67%) say that the company’s areas of strength are likely to be compromised as it tries to stretch itself too thinly.

Nor is this only an issue on the scientific side of the business – more than half of the life sciences companies in this research (56%) are worried about the difficulties of maintaining and supporting a number of different specialist sales teams. There is also the issue of regulation – with a landscape that changes in different ways in different areas of the life sciences industry, managing that change across multiple areas of activities is highly challenging.

Given these difficulties, some companies are turning away from diversification, says Reed Smith’s Carol Loepere. “In the past, you may have had companies that had really diverse product offerings along different disease and specialty areas, but today we are seeing more focus on a particular area or disease state,” she says.

Nevertheless, some diversity will continue – and while personalised medicine is undoubtedly an area where life sciences companies continue to see huge potential, this area of their businesses will continue to operate alongside the traditional broad indication portfolios for the foreseeable future.